IT Contractor FAQs - Frequently Asked Questions

How do I move from an umbrella company to my own limited company?
David Houston explains why switching between an umbrella and a limited company should be a fairly straightforward process,

VAT return errors - what should contractors do?
What should contractors do if they have made an error on a previously submitted VAT return?

How are limited company dividends taxed?
Limited company contractors, who fall outside the IR35 rules, will derive their income via salary, and dividends. But how are dividends actually taxed?

What does a contractor accountant do?
What should limited company contractors typically expect their accountants to do?

Contractor travel expenses - what is the 24 month rule?
An explanation of the 24 month rule with respect to contractor travel and subsistence expense claims.

How much do contractor accountants cost?
How much do contractor accountants charge, and what other factors you should consider before signing up?

Should contractors use the HMRC contract review service?
Why contractors are advised against using HMRC's own IR35 contract review service.

What factors would trigger an IR35 investigation by HMRC?
We look at what factors would typically trigger an HMRC investigation into a contractor's tax affairs.

How much does it cost to set up a company?
There are various ways contractors can set up their own limited companies; via an accountant (a popular way), via a company formations agent, or direct with Companies House.

How do you register your limited company for corporation tax?
If you have set up a limited company for your contracting business, how do you register to pay corporation tax?

Can I share my contractor income with my partner, or family members?
If you are a limited company contractor, is it worth sharing some of your income and profits with your partner or a family member, and can it be justified?

Does my limited company have to appoint a secretary?
From April 2008, since the introduction of an initial wave of Companies Act 2006 legislation, limited companies no longer have to appoint a company secretary.

What is BN66 and how does it affect contractors?
How does BN66 prevent double taxation treaty abuse, and how does it affect contractors who have used offshore tax avoidance schemes in the past?

What expenses can I claim via my limited company?
The expenses you are allowed to claim through your limited company are dependent on the IR35 status of your contract.

Why don't IT contractors set up as sole traders?
The most popular way to start up in business in the UK is as a sole trader. So why do IT contractors avoid this route, and work via their own limited companies or via an umbrella company scheme?